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 August 4: World Bank on Food Prices – Better Late than Never In the midst of the 2008 commodity price spike, a “leaked” report from the World Bank pointed its finger at increased renewable fuels usage as the culprit, going so far as to claim 75% of the food price hike was linked to renewable fuels. But in a new report, the World Bank has come to their dollar and senses. The World Bank now says that “the effect of biofuels on food prices has not been as large as originally thought…” They note that worldwide biofuels account for only about 1.5% of land planted to grains and oilseeds, which “raises serious doubts about claims that biofuels account for a big shift in global demand.” So what was behind the commodity bubble in 2008, the World Bank now says “index fund activity” (i.e. speculators) and “energy markets” played key roles. Sound familiar? That was the conclusion of the renewable fuels industry, USDA, and others during the height of the nonsensical food vs. fuel debate. Welcome aboard, World Bank. Please call us before leaking your next report. Just some fuel for thought…
July 27: Ethanol and Beef—A Great Combo There has been a wonderful feature at the Iowa State Fair called “Wine and Prime.” A fairgoer could sample various Iowa wines and choose a bottle for dinner. They then went over to the Iowa Beef Cattleman’s headquarters for a prime rib dinner. What a great way to promote ethanol (beverage grade) and beef. Now we learn that great combo isn’t reserved for just the State Fair. The USDA recently reported that the number of cattle on feedlots was up 10% in Iowa compared to last year – more than 3 times the national increase. Why is Iowa attractive? Most cattlemen will say because of the availability of low-cost feed co-products from Iowa ethanol plants. While opponents still try to promote a “food vs. fuel” controversy, the facts on the ground paint another picture: food and fuel. Ethanol and beef, now that’s some fuel for thought…
May 28: Environmentalists Blame Biofuels “Plantations” For World’s Environmental Woes The latest challenge to the federal Renewable Fuels Standard 2 comes from an environmental group that thinks Big Oil is getting a raw deal and that we’ll see biofuels “plantations” sprouting up across the country to meet the RFS requirements for renewable fuel use. Somebody’s watching too many reruns of “Gone with the Wind.” The Clean Air Task Force warns that displacing gasoline from the U.S. market under the RFS2 would actually reduce overall demand for petroleum, leading to lower petroleum prices, leading to increased consumption and higher greenhouse gas emissions in other countries. Isn’t reducing demand for imported oil a good thing? Paying less for anything in this economy is a good thing. And blaming Americans for the energy use in countries halfway across the world verges on ludicrous. To claim that RFS2 will cause land conversion to biofuels plantations overlooks the fact that crop acres have declined over the last eighty years while productivity has increased ten-fold. So what’s next – blaming biofuels for the Chicago Cubs not winning a World Series in over 100 years? That’s Fuel for Thought.
May 4: Madam Speaker: I Have a Suggestion
Congress Daily reported today that House Speaker Nancy Pelosi attended an economic summit this morning. On the way to the event, Speaker Pelosi stated: “right now, we are greatly eager to hear from ... economists, intellectuals, people who can measure success of what we have done, make suggestions for where we go from here.”
While I am not an economist and many would debate whether I am an intellectual, please allow me to answer those questions. What you have done, by inaction on extending the noncontroversial biodiesel tax credit, is shut down the U.S. biodiesel industry and throw thousands of people out of work all over this country – 12 more in Galva, Iowa just today. Where you go from here is to replace the rhetoric of the Ivory Tower economic summit with the roll-up-your-sleeves legislative work needed to pass the biodiesel tax credit. While this will not solve every economic problem in America, it will reinstate literally thousands of good paying, green-collar jobs in less than 24-hours after the bill is signed. Not a bad day’s work. Just some fuel for thought…
May 3: Big Oil Companies Join Brazilian Ethanol Call for Tariff Removal – But I Repeat Myself
Big oil companies have long sought an end to the ethanol import tariff. Their allies in this are Brazilian ethanol producers. The tariff offsets the U.S. taxpayer funded ethanol blenders incentive that goes, mainly, to major oil companies. So removing the tariff would result in U.S. taxpayers incentivizing Brazilian ethanol production (not creating jobs and energy security at home) and it would also fatten the pockets of Big Oil.
But wait, there’s more! Petrobras, the huge Brazilian government-owned oil company, just bought about half of Brazil’s fourth largest ethanol producer. And not too long ago Royal Dutch Shell bought the largest Brazilian ethanol producer. And before that BP bought a chunk of Brazilian ethanol production. Very quickly, Brazilian ethanol is simply becoming Big Oil. And by removing the tariff, they want to put their hands deeper in your pockets. Surprise, surprise! Just some fuel for thought…
April 28: Oil Spill = Weapon of Mass Destruction
When asked why their model did not include any indirect impacts for petroleum fuels at a hearing a year ago, Mike Scheible, Deputy Executive Officer of the California Air Resources Board (CARB), responded, “Actually, we looked for them. I thought before it was kind of like the search for the weapons of mass destruction that went along a few years ago.” Really? I wonder if the oil spill from early April that will devastate the Great Barrier Reef for the next 30 years got Mr. Scheible’s attention. If not, perhaps the recent explosion of the oil rig in the Gulf of Mexico enlightened Mr. Scheible as to oil’s potential indirect impacts. An oil slick larger than the state of Rhode Island is endangering hundreds of miles of coastline and beaches in four states. Along with potential damage to dolphin, sea bird, fish, whale, oyster and plant populations, the oil slick threatens the jobs of the fishing and shrimping industries just now starting to recover from Hurricane Katrina.
At that same hearing a year ago, Wes Ingram of CARB proclaimed, “To date, staff has identified no significant indirect effects from fuels other than biofuels.” I hope even CARB would agree that the effects of this oil spill in the Gulf are significant, and they are much more damaging to the environment that any phantom land-use changes for which renewable fuels receive blame. Oh, and Mr. Scheible, I think I can help you find that weapon of mass destruction: it’s about 48 miles long, 39 miles wide, shiny and translucent and heading north for shore. Just some fuel for thought…
April 14: Oil = Direct Land Use Change Last week, a huge Chinese tanker went off course and crashed into the Great Barrier Reef, leaking over three tons of heavy fuel oil into the surrounding pristine waters and causing damage so severe that it could take marine life over 20 years to fully recover. While most of the initial damage to the reef was due to the impact of the tanker, the most urgent concern following the crash was preventing the tanker’s remaining 970 tons of sludgy fuel oil from spilling onto the reef. If that same tanker had been fueled with clean, renewable, biodegradable B100 (100% biodiesel), the Great Barrier Reef and all its marine life would have been exposed to no additional ecological danger beyond the crash itself. Can people honestly say that petroleum-based fuels have no effects on land use change following a disaster like this? Just some fuel for thought...
April 12: Aggressive New CAFE Standards Conserve Oil – Context Please! The federal government recently announced DOT/EPA’s “historic new federal rules” for fuel economy and GHG emissions of cars and light-duty trucks. As a result, the rule “conserves about 1.8 billion barrels of oil over the lifetime of the vehicles regulated.” Ethanol use at current levels (which will only increase) will reduce oil use by 1.8 billion barrels over about 5 years. I think it’s safe to assume that the estimated “lifetime of the vehicle” is well over 5 years (unless, of course, our intern nicknamed “Crash” is behind the wheel). My point is not that the new rules are good or bad. It is just a good reminder that the federal RFS2 is a truly historic piece of legislation that can rightly be considered the “first ever” greenhouse gas emissions rules for the transportation sector. With respect to the new rules US Transportation Secretary Ray LaHood stated: “We will be helping American motorists save money at the pump, while putting less pollution in the air.” He might as well have been talking about RFS2. Just some fuel for thought…
April 2: Big Oil Is Trying to Have It Both Ways – Again Big Oil recently sued the EPA over its implementation of the RFS2 rules. Big Oil is complaining that EPA’s rules were finalized in March but are “retroactive” to January 1, 2010. Now I’m not encumbered with a legal degree, but this complaint does not pass the smell test. First, the obligated parties (Big Oil) have until December 31, 2010 to comply – nothing retroactive about that. RFS2 never said when or where during a year you must use renewable fuels. Second, Big Oil contributed to the long rulemaking process by insisting that the EPA unfairly penalize renewable fuels with indirect land use change. In public comments, Big Oil even encouraged the EPA to delay the rules until the end of 2010.
But most importantly, Big Oil has known its LEGAL obligations since December of 2007 when then-President Bush signed RFS2 into law. With or without agency rules, RFS2 has been the law of the land and Big Oil has known how much ethanol and biodiesel it must use. To claim now that Big Oil has only nine months to blend two years worth of biodiesel is absurd. Big Oil should be embarrassed – but that is a threshold much less likely to be reached than the RFS2 requirements. Just some fuel for thought…
November 13: 2009: Ethanol Up so Food is Down? Wrong! With news that ethanol production is on track to exceed a record 11 billion gallons in 2009, some might think that there will be less corn left over for food and feed. Nothing could be further from the truth. The latest USDA crop report shows that record corn yields will provide more than enough “new” corn for the increased ethanol production with millions of bushels left over. In fact, since 1990 increased corn production has completely satisfied the growth in the ethanol industry – not one kernel less for food and feed. Now that’s some fuel for thought!
November 5: Are foreign automakers hurting U.S. E85 sales? Hai! (Yes) As Iowa and the U.S. works to decrease its dependence on foreign oil by boosting the availability and use of E85, another “foreign dependence” is increasingly hampering this effort. According to Autodata Corporation, of the top ten selling vehicles in the U.S. in October, only two were available as flexible fuel vehicles (FFVs) capable of using E85. Luckily these vehicles (Ford F-150 and Chevy Silverado) were the top two in sales. But the next eight top sellers (produced by Toyota, Honda, and Nissan) had two things in common: they were not FFVs and they were produced by Japanese automakers. Despite U.S. automakers making more and more models available as FFVs, most foreign automakers have offered few – if any – FFVs to U.S. consumers. For this reason, we urge Iowans to support Sen. Harkin’s legislation that would require a growing percentage of vehicles made in the U.S. to be FFVs so consumers will have fuel choice. But the bill needs to be expanded. The requirement shouldn’t be on vehicles “made” in the U.S., but rather on vehicles “sold” in the U.S. Let’s not let one foreign dependence exasperate another. Just some fuel for thought.
October 30: #4 National Ranking Not Good Enough for Iowa…on E85 Pumps, that is! This week, the State of Illinois celebrated the opening of its 200th public E85 station, and we offer Illinoisans our sincere congratulations on reaching this milestone. However, Illinois’s success should serve as a wake-up call for Iowa. Why is that, you might ask? As the nation’s leader in both ethanol plants and production, and with the nation’s most generous incentive to install E85 pumps, surely Iowa is also #1 in E85 stations, right? Unfortunately, wrong. Currently, Iowa is ranked #4, and I’m not just talking about college football. Iowa is fourth in the nation in E85 refueling locations as well, trailing Minnesota, Illinois and Wisconsin. Iowa needs to refocus its efforts to make E85 more available throughout the state so that Iowa can be the nation’s leader in not just producing, but also using ethanol. So the next time you stop in at your local convenience store that doesn’t offer E85, tell them you’re sick of Iowa being stuck at #4 in the nation! Just some fuel for thought…
October 28: Ethanol Powers Profits for Oil Refiner. Say what? Valero Energy, the largest independent refiner in the U.S., recently reported a 3rd quarter loss of nearly $500 million as it dealt with higher crude oil prices and reduced gasoline demand. Nothing too surprising there. But look a little closer. For the same quarter, Valero reported $49 million of operating income from its ethanol business. (Valero bought several plants in Iowa and elsewhere from the bankrupt VeraSun Energy.) I’m not naďve enough to predict that ethanol will continue to be the dominant profit center for Valero going forward – but I can’t help but smile at the irony of this situation given the doom and gloom predictions for ethanol’s future from many pundits only a few months ago. I wonder if Exxon Mobil took note. I wonder if I want them to?! Just some fuel for thought…
October 23: Poll Showing Strong Support for Corn Farmers and Corn Ethanol is Good…But Also a Call to Action! The National Corn Growers Association released a poll this week that showed that 90% of Americans have a positive image of farmers. Also, 65% of Americans support using corn for fuel ethanol. Now getting 2/3 of Americans to support anything is good. But it is disturbing that more Americans supported using corn for sweeteners (67%) and non-food products like fiber and packaging (73%). I have nothing against those uses. The fact that ethanol ranked below other non-food uses demonstrates that the ethanol industry still has work to do. Clearly, some Americans have bought into the negative, unfounded attacks on ethanol. The good news is those attacks haven’t eroded a strong, national base of support for corn ethanol. But this poll shows we can’t take that support for granted. Ethanol supporters must continue to emphasize that we only use the corn starch – the corn protein goes right back into the feed markets as distillers grains. Just some fuel for thought…
October 20: USDA Says Energy Balance of Biodiesel is 4.5 to 1 and Climbing. Did EPA Get the Memo? A recent joint study by the USDA and the University of Idaho confirms that biodiesel still has the best fossil energy balance of any motor fuel. The report estimates that soybean-based biodiesel yields 4.56 units of energy for every unit of fossil energy consumed over its life cycle. In addition, the study projects that biodiesel’s energy balance will only get better with time due to higher soybean yields, reduced tillage, reduced pesticide use, and increased energy efficiency for both biodiesel plants and soybean processing facilities. Comparing biodiesel’s 4.5 to 1 energy balance with conventional diesel’s 0.84 to 1 energy balance leads a thoughtful observer to question how the EPA, in its proposed RFS2 rulemaking, managed to credit biodiesel with only a 22 percent reduction in greenhouse gas emissions compared with conventional diesel. As the good folks at EPA deliberate how to improve their RFS2 rule, let’s hope they “got the memo” on USDA’s groundbreaking biodiesel research. Just some fuel for thought.
October 16: What do Iowa and Hawaii have in common when it comes to renewable fuels? Both Shenandoah, Iowa and Honolulu, Hawaii have ideal growing conditions for algae. Seriously. The Green Plains Renewable Energy ethanol plant in Shenandoah is now growing algae in tubes that contain red and blue LED lights to simulate Hawaii’s climate. These lights “trick” the algae into believing they’re in tropical Honolulu! Once harvested, the algae can be converted into oil that can be refined into biodiesel, which is blended with petroleum diesel to reduce emissions and our dependence on foreign oil.
What’s so unique about this algae pilot project is that the warm water, waste heat and carbon dioxide from the ethanol plant are combined to provide a perfect environment for growing algae (once the light show is added). This promises to reduce the carbon footprint of the ethanol facility. It’s phenomenal to imagine that a little green organism that thinks it’s in Honolulu can have such a positive impact on our environment. Now, that’s Fuel for Thought.
October 15: Are there really “non-food” biofuels? Yes, but it’s not what you think. Iowa is in the midst of hosting the annual World Food Prize, a highly prestigious award that recognizes people who help feed the world. Over the last couple of years, it has become topical for folks attending the week-long festivities to debate using “food” to produce biofuels. We all know how misguided that debate has been. The productivity of Iowa’s farmers is allowing us to produce fuel from corn starch and soybean oil while still supplying more food to the world than ever before. But it is disturbing to see a few biofuels advocates in this setting take up the chant that the “future” will be about “next generation” biofuels that don’t come from “food” crops.
Any land devoted to growing “non-food” crops for biofuels could have been used, no matter how unproductively, to grow food. Therefore switchgrass, for example, isn’t really a “non-food” crop as some would suggest – it’s being grown on land that could grow “food.” Looking ahead to the next two to three decades, it is impossible to see how the advances in seed technology for traditional biofuels feedstocks won’t result in corn starch and soybean oil remaining the backbone of the biofuels feedstock supply chain. But there will be “non-food” supplements in the forms of crop residues, municipal solid waste, wood waste, and animal fats. And I’m confident we’ll see algae and dedicated energy crops like switchgrass join the mix over time as well.
But the next time you hear about how we should use “non-food” crops to produce biofuels, ask the person what land was used to grow this supposedly “non-food” crop and what food crop grew (or could have grown) on that land the year before. Just some fuel for thought…
October 13: Can Renewable Fuels Really Improve U.S. Energy Security? Exxon Mobil Says Yes! At a recent speech to the Economic Club of Washington, DC, Exxon Mobil CEO Rex Tillerson noted that U.S. gasoline demand peaked in 2007 and that “motor vehicle gasoline demand is down, is headed down, and is going to continue to head down.” Tillerson said the trend is due to the increased use of biofuels along with higher mileage standards for vehicles and hybrid vehicles. This is great news for America, but you kind of get the feeling Tillerson noted this trend with a touch of sorrow. And while Tillerson didn’t directly state the obvious conclusion, it is easy to see that less gasoline use combined with more renewable fuels use equates to reduced foreign oil imports and greater U.S. energy security. The impact of renewable fuels on energy security is already evident! Just some fuel for thought.
October 9: Can children really breathe easier on school buses fueled with biodiesel? You bet!
The millions of kids who ride school buses every day deserve the best possible air to breathe. Why not protect your children’s health with the proven benefits of biodiesel? Fueling school buses with biodiesel instead of petroleum-based diesel significantly reduces air pollutants that can cause asthma, bronchitis, lung inflammation and even lung cancer. Kids who ride buses running on biodiesel also report less headaches and miss fewer days of school. Biodiesel is better for the environment as well, and it’s made right here in Iowa. Does biodiesel sound like a good choice for your school? If so, tell your school board member, superintendant or transportation director to make the switch to biodiesel, and while you’re at it, tell your school officials to apply for a $2,500 Biodiesel Backer Award from the Iowa Renewable Fuels Association. For more information on the health benefits of biodiesel and how to apply for a Biodiesel Backer Award, visit http://www.iowarfa.org/educators.php. Just some fuel for thought.
October 7: Why is Big Oil Working to Make RFS2 Compliance Harder? Throughout the public comment period for EPA's renewable fuels standard (RFS2) rulemaking process, Big Oil has staunchly argued for a rule that makes it more difficult for corn-based ethanol and soybean-based biodiesel to qualify for the program. For example, Big Oil strongly urged EPA to impose large indirect land use penalties on these biofuels. Some have asked why, as parties obligated to use a certain amount of biofuels, would Big Oil work to restrict the supply of biofuels they could use to meet their federal requirement. It makes no sense if Big Oil wants RFS2 to work smoothly. It only makes sense if Big Oil wants the program to appear as a hardship.all the better if their real goal is to ask Congress to scrap RFS2. Just some fuel for thought.
October 6: GAO says ethanol tax credit not driving demand, but what do the numbers show??? A recent report issued by Congress' Government Accountability Office (GAO), claimed that the ethanol blenders tax credit was not driving demand. Instead the GAO stated that only the federal Renewable Fuels Standard (RFS) was creating demand for ethanol. Therefore, the GAO continued, Congress might want to rethink whether the blenders tax credit is still needed. Well, I have a lot of respect for the GAO, but their challenge is to be experts on every conceivable topic a member of Congress might ask about. They do remarkably good work given the staff and time with which they have to work.
However, on a complex issue like this, sometimes the GAO will look at a snapshot of the situation and make determinations without fully understanding the long term implications. When the GAO were researching this report several months ago ethanol prices were not attractive compared to gasoline prices (wholesale) so ethanol demand was being primarily driven by the RFS requirement. But after the first quarter of this year, ethanol prices have become attractive compared to petroleum - with the help of the blenders tax credit. Since May, official government statistics show ethanol use above the 10.5 billion gallons per year rate required by the RFS. In fact, in the most recent month for which data is available, July ethanol demand was at a pace of nearly 11.5 billion gallons per year - ONE BILLION gallons above the RFS requirement. This would not be happening if not for the blenders tax credit. That incentive to petroleum companies helps ensure the RFS is a floor for ethanol use, not a ceiling. Further, it also helps ensure that the RFS will be filled with (mostly) U.S. ethanol and not subsidized foreign ethanol. It is working. Just some fuel for thought.
October 1: I don't own a FFV, so I can't help E85, right? Wrong!
Many ethanol supporters haven't bought a new vehicle recently and, therefore, don't drive a flexible fuel vehicle (FFV) capable of using E85. But they can still help promote E85. I used to stop every now and again at a certain gas station chain in Iowa that has these wonderful little mini chocolate chip cookies in a cup for sale at their checkout counters. But this particular chain doesn't offer E85 or mid-level blends at any of their Iowa stations. So I have said goodbye to the tasty treats and I buy gasoline from stations or chains that offer E85 at some of their locations - even when I drive my old E10 truck. Join me in helping E85 by buying your E10 from gas stations that offer higher blends - and let them know that's why you stop on their side of the road. It helps ethanol. It helps Iowa. And it might even help your waist line. Just some fuel for thought.
Sept. 18: Smithfield Foods – the Guardian of small farmers. Really??
Recently Smithfield Foods CEO Larry Pope declared U.S. ethanol policy “makes absolutely no sense at all” and is “devastating to small farmers in this country.” He also compared using corn for ethanol to burning the floors in your house to provide heat in the winter. (Do the floors, like corn, grow back each year?) Mr. Pope is a proud member of the “Big Livestock” coalition that longs for the days of $1.20 corn in America. You remember those days – how good they were for small farmers, rural communities, and reducing the size of farm program costs on taxpayers??? You remember how Smithfield could buy your corn for less than your cost of production and made your on-farm livestock operation uncompetitive and unprofitable??? I’m not to sure how much credibility someone has who thinks the 1980s were the heyday for small farmers and wants to return to those farm prices. Just some fuel for thought.
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